QUANT SYSTEM TRADE RECOMMEDATION - 04.01.23
- Capt D. Ganesh Raja
- Jan 5, 2023
- 3 min read
From the desk of Capt.D.Ganesh Raja
Hello friends,
Wishing you all a very Happy and wonderful New Year 2023.
I have to join for my marine assignment on Friday, so I thought of posting my views before I leave. I will not have access to Internet connection for the next 35 odd days, so my views are going to be for a little longer time frame based on which allocation can be done.
The domestic markets have not been indicating a clear trend as of now. With India VIX on an upswing from lower levels and currently placed at 15.19, it would be prudent to wait in the side-lines for some more time, to trade on the broad markets. Nifty has closed about its inverse head and shoulder neckline and presently retesting is in progress which is a common event in the technical analysis parlance. Some consolidation at these levels would give a clear picture. Generally, this is a bullish formation.
We have to keep a close watch on geopolitical events with the Ukraine Russia war dominating the headlines. There are far reaching ramifications which might not immediately be visible in the global economies but these are sure to manifest itself as time unfolds. In addition to this, the spike of COVID pandemic in our neighboring country China, where close to 60% of the population is believed to be infected , in addition to the public protests never seen before in decades present us with some interesting times ahead.
What domestic markets generally worry about he’s fed rate hikes which is always believed to cause flight of capital. But at this juncture the interesting phenomenon of inverted yield curve in the US markets is what we should be paying attention to. This indicator had a good deal of accuracy in the past for predicting us recessions. The Fed rate hikes do contribute towards the curve inversion. The general philosophy is that if the short-term interest rates are higher than the long-term interest rates then what is the point in lending money for the long term. Typically, major economic activities need a longer gestation period and investments accordingly.
It would be foolhardy to make our decisions based on a single indicator. However, I was also looking at the SPDR to U.S. dollar chart, which has some clues too. The 10-year support placed at 1.34412 has been broken and presently a technical bounce is in progress, so it is likely that the levels of recent lows of 1.26 could be tested in the coming months. If the 1.26 level is broken it could present itself with bearish view for the US dollar. Weakness in the currency is a leading indicator for the economic recession. Now with these two indicators pointing towards a higher likelihood of a downturn in the US markets it presents with a low-risk shorting opportunity of the US markets. A 10% allocation of funds for shorting DJIA at these levels of 33163 with stop loss at 34429, has a good probability of yielding profit.
If the US markets fall sharply, it is bound to have a cascading effect on the global markets, including our markets but this scenario seems some time away. The correction would be an opportunity to buy into our markets. I would have sufficient time to monitor this, since my present trip is going to be a short one and I would be able to update readers.
Gold is continuing its stellar run, in line with my long term recommendation and it is prudent to continue holding the investments in Gold. Minor dips should be viewed at buying opportunity. For now the immediate target for MCX Gold seems to be 59,126.00.
Few stocks specific recommendation like Tata Steel and Hindalco have been included in Trade Recommendation Log, which will have all the details. The targets for these two stocks are indicative, but holding these trades for a longer time frame would be more profitable in my humble opinion. However it is individual choice if to book profit or hold longer. New trade recommendations are marked in green.
See you all after my return from my short assignment.
RETURNS TILL DATE SINCE 04.07.20 : 75.07% (AS OF FRIDAY 04.01.23 CLOSING)
Comments